Month: November 2018

Behold the absurd new heights of Saudi propaganda. A poster and series of new infographics created by the Saudi Foreign Ministry and now being promoted through official Saudi media accounts depicts Yemeni children and reads “we stand with the Yemeni people” .

A series of propaganda graphics released by the ministry this week claim further that since its 2015 air campaign over Yemen, the Saudi coalition has been “careful in avoiding civilians, women and children, civilian objects and infrastructure from effects of the conflict.”

On Twitter the images of a smiling faces of children along with emblems of Saudi government agencies are accompanied with a ‘We Stand with Yemen’ hashtag.

#UPR3 | We are committed to International Law and work with our partners to stand by the Yemeni people 🇸🇦🇾🇪 pic.twitter.com/ojuUCj500L

— Foreign Ministry 🇸🇦 (@KSAmofaEN) November 6, 2018

The Saudi propaganda blitz comes a week after The Guardian published select contents of a leaked internal United Nations document detailing a “pay to play” scheme orchestrated by Saudi Arabia in which the Saudis demanded that aid groups operating in Yemen provide favorable publicity for Saudi Arabia in return for Riyadh providing close to a billion dollars to fund their efforts.

The leaked document explicitly states for example that Riyadh expects the aid “recipient agency to publish articles in recognized daily newspapers such as the New York Times or the Guardian, highlighting our contribution.”

The Saudi Foreign Ministry is promoting claims that it’s actually helping Yemeni children while simultaneously bombing them. 

But with this prior propaganda effort now exposed it appears the Saudi government is going to the more direct and less subtle route of appealing to the Western English speaking public.

Of course, it goes without saying that nothing could be further from the truth. The United Nations this month declared that as many as 14 million Yemenis — nearly half the population — are on the brink of famine. And another 3 million find themselves internally displaced while the bombs continue to fall. 

Yet the suffering of Yemen’s civilian and especially child population has long been known and documented. In 2017 Foreign Policy published a bombshell report based on possession of a prior leaked 41-page draft UN document, which found Saudi Arabia and its partner coalition allies in Yemen (among them the United States) of being guilty of horrific war crimes, including the bombing of dozens of schools, hospitals, and civilian infrastructure. 

For much of the past three years of war in Yemen most of the Western public have remained largely in the dark as to the true scale of the humanitarian nightmare unfolding in the country. Only with crown prince MbS recently in the hot seat and media spotlight surrounding the Jamal Khashoggi murder have publications from the New York Times to Washington Post to networks like CNN belatedly increased their focus on the Saudi and U.S. role in facilitating Yemen’s widespread suffering. 

“We’re surprised the Khashoggi case is getting so much attention while millions of Yemeni children are suffering,” a doctor said. “Nobody gives a damn about them.” https://t.co/e3GELJKP65

— The New York Times (@nytimes) October 26, 2018

When at the end of last month Secretary of State Mike Pompeo and Secretary of Defense Jim Mattis announced that Washington would seek a ceasefire “in the next 30 days” involving its Saudi and UAE partners on one side and Houthi rebels on the other, the Saudi response was to noticeably increase the intensity of its bombing campaign over Sana’a. 

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Authored by Celine Ryan via Campus Reform,

A New York professor asserted on Monday that there is “nobody” in the current Republican party who is “more than three handshakes away from a Nazi.”

Angus Johnston, a professor at Hostos Community College, part of the City University of New York, made the statement in a response to recent reports that Republican Kris Kobach, who President Donald Trump endorsed for Kansas governor accepted donations from white nationalists.

“There’s nobody in the contemporary GOP who’s more than three handshakes away from a Nazi,” Johnston said, who describes himself as an “advocate of American student activism.”

The professor referenced Iowa Republican Rep. Steve King, whose recent campaign ad was widely criticized as racist.

“I’m convinced that this is the biggest reason the Republican Party has been so reluctant to repudiate Steve King, even as the costs of embracing him have risen,” Johnston said.

“They’re scared to death of the precedent.”

But the professor did not substantiate his claim beyond Kobach and King.

Johnston expressed delight earlier in 2018 when neighboring Democrats did not offer financial help to the Lincoln, Nebr. GOP office after vandals threw bricks through the office windows, The Daily Caller News Foundation reported. 

He called this lack of action “the most hopeful sign [he’d] seen in months.”

In addition to teaching college courses, Johnston supports left-wing “student activism.”  On his website studentactivism.net, students can find door-knocking and campaign tips, as well as order forms for stickers that read “Fight Fascism.” Johnston says he has had thousands of stickers made in order to fill the demand. Although he bills the stickers as “free,” the fine print indicates that he expects to be compensated for his efforts.

“Well, there’s no set charge per sticker, but don’t make me a chump,” Johnston’s website reads. “I’m going to put the first chunk of cash I receive directly into buying more stickers, and I’m hoping this works out well enough to be a model that I can use again in the future without draining my bank account. In other words, if you send me a dollar and ask for five hundred stickers, that’s not going to be sustainable.”

Campus Reform reached out to Johnston for comment but did not receive a response in time for publication.

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Embattled Argentinian President Mauricio Macri has been scrambling to shore up his country’s struggling currency since the IMF’s executive board finally approved a record – and expanded – $57 billion bailout loan with the explicit condition that the country’s central bank refrain from using that money to support the Argentine peso.

But as Argentina’s battered economy has continued to deteriorate, the peso’s value has eroded dramatically as the central banks pushed , cementing its status as one of the worst-performing currencies of 2018, as traders ignored a series of frantic rate hikes that brought the overnight interest rate in the country to a staggering 60% (which appears somewhat more appealing next to the country’s annualized inflation rate of 40%).

With Argentina’s economy slipping into a recession back in September, Macri’s government imposed strict fiscal controls to try and limit the country’s reliance on international debt markets – markets to which it only recently regained access. The country’s economic desperation, which has dented Macri’s popularity and cast doubt on his chances of winning reelection next year, prompted us to joke a few months back that it might be time for the ECB to jump on the IMF bailout bandwagon.

ARGENTINE PESO EXTENDS LOSS, HITS NEW ALL-TIME LOW AT 23.16/USD

Time to add ECB to IMF bailout

— zerohedge (@zerohedge) May 11, 2018

But unfortunately for the West, which sees Argentina and its business-friendly government as a key ally in a region that is slowly falling under Beijing’s sphere of influence, the savior that has emerged to shore up the peso, which has stabilized in recent weeks, though it remains near all-time lows, is not what US leaders would have hoped – particularly with this year’s G-20 conference, set to take place in Buenos Aires, only days away.

As the South China Morning Post reported on Thursday, China and Argentina are nearing a swap deal with China that would add another 60 billion yuan ($8.7 billion) to the Argentine central bank’s reserves, an influx of capital explicitly intended to boost confidence in the peso and help alleviate the country’s economic crisis before it enters Venezuela territory. The economic lifeline is particularly unnerving given decisions by Honduras and El Salvador to switch their diplomatic recognition from Taipei to Beijing, an unequivocal sign that their political and economic fealty now lies with the PRC.

Argentina’s recently installed central-bank governor announced the deal during a visit to Beijing, where a delegation of Argentinian economic officials are meeting with representatives of the Communist Party. The delegation reportedly met with PBOC Chairman Yi Gang on Wednesday.

“Argentina and China have signed a currency swap totaling 70 billion yuan before, and we are looking to expand it by adding another 60 billion yuan,” Guido Sandleris, Argentina’s new central bank governor, said in Beijing on Thursday.

The delegations “exchanged views over the financial situations of China and Argentina as well as bilateral financial cooperation,” according to state broadcaster CCTV. Ahead of the G-20 summit, President Xi Jinping is expected to visit China.

“This is a very important visit and we are going to sign around 30 protocols on all areas,” said Diego Ramiro Guelar, Argentina’s ambassador to China.

Trump and Xi are expected to meet on the sidelines of the G-20 for their first face-to-face talks on trade since Trump started slapping tariffs on Chinese goods entering the US over the summer. It will also mark the first face-to-face meeting between the two leaders since Trump’s visit to Beijing late last year.

But as the SCMP, which has ties to the Communist Party, has warned that observers shouldn’t expect any breakthroughs on intellectual property or Chinese market access during the talks, the US is bound to view this latest encroachment on its sphere of influence as another deliberate threat.

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Via MiddleEastMonitor.com,

US whistle-blower Edward Snowden yesterday claimed that Saudi Arabia used Israeli spyware to target murdered Saudi journalist Jamal Khashoggi.

Addressing a conference in Tel Aviv via a video link, Snowden claimed that software made by an Israeli cyber intelligence firm was used by Saudi Arabia to track and target Khashoggi in the lead up to his murder on 2 October inside the Saudi Consulate in Istanbul.

Snowden told his audience:

“How do they [Saudi Arabia] know what his [Khashoggi’s] plans were and that they needed to act against him? That knowledge came from the technology developed by NSO,” Israeli business daily Globes reported.

Snowden accused NSO of “selling a digital burglary tool,” adding it “is not just being used for catching criminals and stopping terrorist attacks, not just for saving lives, but for making money […] such a level of recklessness […] actually starts costing lives,” according to the Jerusalem Post.

Snowden – made famous in 2013 for leaking classified National Security Agency (NSA) files and exposing the extent of US surveillance – added that “Israel is routinely at the top of the US’ classified threat list of hackers along with Russia and China […] even though it is an ally”.

Snowden is wanted in the US for espionage, so could not travel to Tel Aviv to address the conference in person for fear of being handed over to the authorities.

The Israeli firm to which Snowden referred – NSO Group Technologies – is known for developing the “Pegasus” software which can be used to remotely infect a target’s mobile phone and then relay back data accessed by the device. Although NSO claims that its products “are licensed only to legitimate government agencies for the sole purpose of investigating and preventing crime and terror,” this is not the first time its Pegasus software has been used by Saudi Arabia to track critics.

In October it was revealed that Saudi Arabia used Pegasus software to eavesdrop on 27-year-old Saudi dissident Omar Abdulaziz, a prominent critic of the Saudi government on social media.

The revelation was made by Canadian research group Citizen Lab, which found that the software had been used to hack Abdulaziz’ iPhone between June and August of this year.  Citizen Lab’s Director Ron Deibert explained that such actions by Saudi Arabia “would constitute illegal wiretapping”.

A separate report by Citizen Lab in September found a “significant expansion of Pegasus usage in the Gulf Cooperation Council (GCC) countries in the Middle East,” in particular the United Arab Emirates (UAE), Bahrain and Saudi Arabia. Citizen Lab added that in August 2016, Emirati human rights activist Ahmed Mansoor was targeted with the Pegasus spyware.

Snowden’s comments come less than a week after it emerged that Israeli Prime Minister Benjamin Netanyahu asked the United States to stand by Saudi Crown Prince Mohamed Bin Salman (MBS) in the wake of the Khashoggi case. The revelation was made by the Washington Post , which cited information from US officials familiar with a series of telephone conversations made to Jared Kushner – senior advisor to President Donald Trump and Trump’s son-in-law – and National Security Adviser John Bolton regarding the Khashoggi case. The officials told the Post that:

In recent days, Egyptian President Abdel Fatah Al-Sisi and Israeli Prime Minister Benjamin Netanyahu have reached out to the Trump administration to express support for the crown prince, arguing that he is an important strategic partner in the region, said people familiar with the calls.

Bin Salman has come under intense scrutiny in the month since Khashoggi first disappeared, with many suspecting his involvement in ordering the brutal murder. Yet while several world leaders have shunned the crown prince, it is thought that Israel would suffer from any decline in Saudi influence in the region in light of its purportedly central role in the upcoming “Deal of the Century”.

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Three days ago, when we reported that following Trump’s latest sanctions targeting Venezuela’s gold sector president Maduro was seeking to repatriate all of Venezuela’s gold – some 14 tons – held at the Bank of England, we cautioned that since the BoE “sought to clarify what Venezuela wants to do with the gold”, this suggested that despite Venezuela being the rightful owner of this gold, Venezuela was about to face challenges in getting it back.

Today, the worst case – for Venezuela’s president – was confirmed, when the Times reported that the Bank of England has “refused to release the gold bars” worth just over $550 million to President Nicolas Maduro.

According to the Times, the reason the BoE has refused release is due to its insistence that standard measures to prevent money-laundering be taken — “including clarification of the Venezuelan government’s intentions for the gold.”

“There are concerns that Mr. Maduro may seize the gold, which is owned by the state, and sell it for personal gain,” the newspaper said.

Separately, as we reported on Monday, an official told Reuters that the repatriation plan has been held up for nearly two months due to difficulty in obtaining insurance for the shipment, needed to move a large gold cargo: “They are still trying to find insurance coverage, because the costs are high,” an official told Reuters.

As we reported on Monday, Venezuela’s gold located at the BoE was previously used as collateral until last year, backing loans up to several billion dollars from global banks.

Maduro is not the first to attempt to repatriate the country’s gold. Venezuela’s late socialist leader Hugo Chavez, sensing which way the wind is blowing and citing the need for Venezuela to have physical control of central bank assets, in 2011 repatriated around 160 tonnes of gold from banks in the United States and Europe to the central bank in Caracas. But some of Venezuela’s gold remained in the Bank of England. Starting in 2014, Venezuela used this gold for “swap” operations in which global banks lent Venezuela several billion dollars with the gold as collateral.

Meanwhile, as shown in the chart above, Venezuelan central bank statistics show the central bank’s gold holdings by June this year had dropped to 160 tonnes from 364 tonnes in 2014, as some of the swap agreements expired without Venezuela returning the funds – leaving the gold in the hands of the banks. By 2017, swap agreements with Caracas became impossible due to U.S. sanctions, which blocked U.S. financial institutions from bankrolling any new financing operations, while leaving the legal fate of pledged gold in limbo.

Last week, Washington imposed new restrictions against Venezuela targeting the country’s gold exports, accusing the Maduro government of “looting” Venezuela’s stocks of the precious metals amid the country’s economic crisis. The sanctions, which target US individuals and companies trading in Venezuelan gold, was announced by US National Security Advisor John Bolton last week, with Bolton also branding Caracas a member of a “troika of tyranny” along with Cuba and Nicaragua.

Venezuela has made a concerted effort to become a major gold exporter, and is engaged in certifying some 32 gold fields, and building 54 processing plants in a bid to become what Maduro said would be “the second largest gold reserve on Earth.”

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Authored by Simon Black via SovereignMan.com,

Something strange happened in the markets last month that signals trouble ahead…

When stocks fell from their September highs, you would have expected investors to run for cover in the world’s safe-haven asset – US Treasurys.

But that’s not what happened.

While stocks were plunging, Treasurys also fell. Yields on 30-year Treasurys increased to 3.4% from 3.22% (and yields have already more than doubled from their 2016 lows).

It’s a sign that the market is worried about the US government’s ability to pay its exploding debts and that inflation is creeping back into the market.

That makes me a bit nervous because we haven’t seen inflation in a decade.

We’ve seen an increase in oil prices, food prices, rent and many other things that eat into people’s savings. Unemployment is low and US wages increased 3.1% in September (the highest in nine years). And core inflation is already running above the Fed’s target of 2%.

In general, inflation is nothing to panic about. The Fed is supposed to raise rates when inflation heats up, which it’s been doing.

But as rates have moved higher, we’ve already seen stocks and real estate fall.

The entire financial system has been dependent on super low rates for the past ten years. The Fed held rates at zero for a decade and printed trillions of dollars.

The increase in prices and interest rates to date is only the beginning.

Just take a look at what’s happening in the economy right now…

• Food companies like Coca-Cola, Mondelez, Hershey and Kellogg are all raising prices as both ingredient and transportation costs increase. Kellogg’s CEO recently said in an interview, “We think 2019 will be more inflationary than we have seen historically since the recession.”

• McDonald’s and Chili’s both raised prices.

• Airlines are paying 40% more for jet fuel than they were a year ago.

• Manufacturing companies are paying 8% more for aluminum and 38% more for steel than a year ago… and they’re dealing with a 10% tariff on Chinese goods.

• Paint company Sherwin-Williams increased prices in its stores as much as 6% last month, with the CEO saying “Raw material inflation has been unrelenting and accelerating.”

• Even Apple is falling victim to inflation. The company raised prices on its new MacBook Air and iPad Pro by 20% and 25%, respectively.

Companies are passing along price increases to you, the consumer. And that makes it harder for you to “tread water” financially.

The Fed will have to further boost interest rates in reaction to this inflation.

But it’s raising rates while the US government is running trillion-dollar deficits into perpetuity. And now it will have to pay more interest on that debt (which it already can’t afford).

The world hasn’t seen inflation in a decade now. But it’s coming. And while the Fed is raising rates to combat inflation, there’s zero chance it hits the perfect mix to keep markets chugging along.

Remember, we’ve already seen the stock market and real estate panic crash in response to a small interest rate hike.

And I think there’s more pain ahead as inflation really starts to work its way into the economy.

With inflation looming, I’d want to own some gold. I’m also happy waiting it out in 28-day Treasury bills, so I’m liquid when buying opportunities arise.

And next week, I’ll share another interesting asset you can hold to combat inflation (something that’s trading close to its post-crisis lows).

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As was widely expected following his promises to stop crowds of illegal migrants from entering the US, President Trump on Thursday signed an order to end asylum for illegal immigrants before the caravans arrive. The order, which is expected to elicit howls of outrage from the left, will almost certainly be met with a court challenge, according to a Bloomberg report.

The Trump administration said it would prohibit people who illegally cross the U.S. border with Mexico from claiming asylum, as the president seeks to choke off migration from Latin America, Bloomberg News reports.

The change to asylum procedures was published Thursday by the Justice Department. President Donald Trump has blamed U.S. asylum rules for luring thousands of migrants a year from Central American countries. The new rule is almost certain to be challenged in courts.

According to an NBC News report published early Thursday afternoon, senior Trump administration officials expect to be sued over the “draconian” immigration order. But with Brett Kavanaugh cementing a conservative majority on the court, the administration expects that it will prevail, as even the pre-Kavanaugh split court allowed the administration some wiggle room to implement its controversial travel ban. However, some worry that Neil Gorsuch could throw a wrench in the works by opposing the proposal, as he appeared to have reservations about supporting another restrictive immigration ruling during arguments on another case earlier in the term, per the New York Times.

In the days before Tuesday’s midterm, Trump ordered thousands of national guard troops to the US-Mexico border to offer “support” for border patrol agents and another wave of national guard troops who had been dispatched to the border earlier in the year.

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Shares of Wynn Resorts plunged as much as 15% after the casino operator reported adjusted third-quarter earnings in line with expectations and sales that beat forecasts but in a subsequent call with analysts said it was seeing a “slowdown” at its Macau location, especially from the highly profitably high rollers.

While CEO Matthew Maddox said results were strong during China’s seven-day Golden Week holiday, since then attendance has been “choppy” during weekdays and “sporadic” on the weekends.

“So what we’ve seen post-Golden Week has been a slowdown. And we’ve seen it, in particular, in the premium end of the business, premium mass, premium slots, and VIP,” Maddox said on Wednesday’s earnings call. That bodes poorly for the gambling giant, which derives the “vast majority” of its pretax earnings from its high-end offerings.

“What we’ve always focused on in our business is the premium end, and we always will because in Macau while that will be the first to retract in these times, it’s also the first to expand as you come out of these slowdowns,” Maddox added.

Of course, that Macau is “retracting” now is another warning sign about not only the strength, or rather weakness, of China’s economy, and by implication, the global economy. Maddox confirmed as much saying that while a contraction in Macau is now being observed, which will likely impact the company’s bottom line, the CEO also observed that there seems to be a deceleration in the premium market globally, with softer performance in Singapore and Las Vegas as well.

But the one excerpt that grabbed Wall Street’s attention was Maddox admission that market conditions now are reminiscent of the recession of 2008/2009:

[A]s we’ve seen in the past, whether it was in 2003 with SARS and what happened at the VIP market and the recession in 2008 and 2009, in 2014, when we saw the premium in VIP market started to slow down globally, that always impacted Las Vegas as well.

Needless to say, any time a company mentions recessionary conditions in its market, the market sells first and asks questions later. Sure enough, Nomura Instinet analyst Harry Curtis said that “WYNN’s messaging was negative, which sent the shares down 10 percent in a heartbeat.”

“Management tried to explain the worse-than-expected trend as a loss of confidence especially among premium players,” Curtis added, quoted by CNBC. “We agree, but believe that some historic perspective should have been provided: that in markets with slowing economies, players keep visiting casinos and their ability to wager may not be impaired, but their spend/bet declines.”

Whatever the reason, today’s drop in Wynn shares was the latest hit to company shareholders, who were already nursing a 30% decline in 2018 even before the company’s third-quarter results.

While concerns have lingered about whether a dip in economic growth could hit the gambling industry, some have speculated that the culprit is the ongoing bear market in Chinese stocks. The Shanghai composite has slumped 22.8% during the last year, one of the worst performers of the closely followed global indexes. Some has suggested that any improvement in trade relations between Beijing and Washington could help the Chinese economy and Wynn’s performance in Macau.

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Hawk ‘Flawless Victory’ today…

For the second day in a row, the afternoon session in China saw notable selling and no rescue…

 

An early pop in Europe faded quickly leaving DAX unchanged on the week… (Spanish stocks are outperforming)

 

US Stocks, Gold, and bonds ended lower (in price) post-Fed, USD higher…

Stocks were all lower post-Fed, even with the panic-bid into the close…

 

And US equities tried their best to rally after the open but it all fell apart after The Fed’s hawkish statement…

 

US equity markets bounce stalled at crucial technical levels (S&P 100DMA, Nasdaq 200DMA, Dow 50DMA)

 

After 5 straight days of short-squeezing higher, “Most Shorted” stocks ended red today…

 

VIX term structure shifted back into inversion today as stocks sank…

 

Energy stocks sank today – as you’d expect – finally starting to catch on the to collapse in crude…fun-durr-mentals

 

Yesterday’s exciting surge in FANG stocks stalled rather notably today…

 

Treasury yields were higher on the day (though the 30Y outperformed, ending unchanged) pushing higher after The Fed…

 

The yield curve flattened notably…

 

Either bond yields go lower or cyclicals are set to soar…

 

The USD Index was heading higher into the Fed statement and extending its gains notably after…

 

And as the dollar rallied, yuan slumped…

 

And EM FX plunged…

 

Dollar strength also weighed on cryptos…

 

Crude and Copper lead the commodity carnage this week and PMs faded too as the dollar jerked higher…

 

WTI Crude down 9 days in a row into a bear market, down 21.25% from Oct highs to 7-month lows…(a Hawkish Fed and OPEC-break-up chatter did not help)…

 

In 33 years of futures contract trading, it has never been down 10 in a row…

 

Inflation Breakevens continue to decouple from crude’s collapse…

 

Finally, we leave you with this bigger picture chart…

As Bloomberg’s Ye Xie notes, as of June, the ratio stood at 45%, the highest since the dot.com bubble at the turn of the century. It suggests that the annual return for the next decade is close to zero (0.7% to be precise, based on the regression). In other words, the stock market would deliver negative returns after adjusting for expected inflation.

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